What You Need To Know About Labor Nominee Thomas Perez ’s Secret Deal

On Thursday Labor Secretary nominee Thomas Perez was confronted during confirmation hearings over an alleged "secret deal" that he cut with leaders from St. Paul, Minnesota, during his tenure as a top attorney at the Department of Justice.

Perez tangled with several Republicans on the Senate Health, Education, Labor and Pensions Committee, who had concerns about Perez's involvement in a "secret deal" to settle a whistle-blower case in Minnesota. They also questioned Perez about the department's aggressiveness in challenging South Carolina's voting rights law, and about the ethics of sending emails to reporters providing non-public information about case resolutions.

Ranking Member Senator Lamar Alexander (R-Tenn.) said he has concerns about why Perez orchestrated the deal with St. Paul to drop two False Claims Act cases—where the government potentially could have recovered $200 million—in exchange for the city dropping an appeal to the U.S. Supreme Court related to the disparate impact legal theory. When Perez took over the Civil Rights Division, in 2009, he said DOJ had "dusted off" that legal theory.

At Thursday's hearing, Alexander called Perez's actions in the St. Paul settlement "an extraordinary amount of wheeling and dealing" that was "manipulating the legal process" in a way that "is inappropriate for an assistant attorney general." Congressional Republicans released a 65-page report on the case Monday that was critical of Perez.

Committee Chairman Senator Tom Harkin (D-Iowa), a lawyer, decided to step through the case point-by-point, allowing Perez to explain for the first time publicly how the Justice Department made the now-controversial global settlement.

Perez said that it was St. Paul, and not the Justice Department, that first brought up the possibility of a global settlement. Perez said he consulted with ethics and professionalism experts in the Justice Department, who said it was appropriate as long as Tony West, then the Civil Division chief, retained the ultimate decision on the deal.

A Republican report released earlier this week indicated that Perez helped persuade St. Paul to exchange dropping a lawsuit for the DOJ staying out of whistleblower cases brought against the city. The report indicated that the "quid pro quo" could potentially cost taxpayers as much as $200 million!

"That seems to me to be an extraordinary amount of wheeling and dealing outside the normal responsibilities of the assistant attorney general for civil rights," said Senator Lamar Alexander (R-TN).

"It seems you have a duty to the government to collect the money, a duty to protect the whistleblower who's kind of left hanging in the wind," he added.

Both cases involved the city of St. Paul. The 67-page report states that the Justice Department's decision to opt out of the whistleblower cases potentially cost taxpayers as much as $200 million -- the amount the government could have won had it pursued damages in the case.

But, according to the report, the Justice Department stayed away from that case in order to get the city to drop an appeal to the Supreme Court on another matter. The department was allegedly concerned that the high court, in the course of reviewing that case, would strike down a major element of civil rights enforcement.

The case the Justice Department was allegedly concerned about was St. Paul's appeal on a case in which property owners said the city made extraordinary efforts, through strict code enforcement, to condemn their properties. The owners said reducing the amount of affordable housing for minorities violated the federal Fair Housing Act -- by what is known as "disparate impact."

Senator Alexander grilled Perez on his comment that the DOJ "is really a guardian of the Fair Housing Act," by responding "Well, the Department of Justice is a guardian of taxpayers as well."

Democrat Senator Tom Harkin (IA), chairman of the committee, sought to defend Perez against criticism saying, "I think it's clear the department made the right call." He then added that he believed Perez acted "ethically."

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